Comments (9)

• praetorian

  This thread is useless without YouTube.

  Cheers,
  prat

  Published: February 24, 2009 8:40 AM

• Brad

  The 70's saw some pretty dramatic inflation rates where it's corrosive effects manifested themselves so clearly.

  And what did we do? We "stabilized" inflation after the 70's to 2-3% per year. No more of those nasty surprises.

  I become more convined by the day that it is creeping inflation that has contributed much to our current crisis. I think that so many people who were mere youths in the 70's who had some notion of what "good money" was as far as earnings continue to translate those dollars forward to today.

  When I was young, a family could get by on $25,000 a year, pay for a house (though not grand), have a car, and pay for necessities and food. Pretty good money was $35,000+. Doctors and lawyers were making $75,000 a year and living in style. So today we have couples in their early to mid 40's, who grew up when $75,000 was affluence, making $85,000 between the two of them and they think they should be living the life of Riley when $85,000 today was $35,000 in 1982. Not terrible money but certainly not big screens in every room and upper end cars.

  That's not to say that they weren't aware of prices going up at the register, but I think there's a psychological disconnect between knowing Corn Flakes just went up 7 cents and what that means in total. People still think $85,000 or a $100,000 is monumental money when it's middle-middle class money.

  I think much of our crisis today is because people THINK they should have been living better than they were because there were plenty of zeroes on their gross paystubs, and felt wealthy enough to run up charge cards and build bigger houses than they could afford. So many people I know think (or thought) they were much better off than they were because they couldn;t grasp the overall impact the compounding (of even small) inflation rates.

  In twenty three years money falls in half at 3% inflation. So someone who was ten in 1975 has seen money fall by nearly 2/3rds since then, and with little or no financial education, they still believed that they were making extraordinary money despite the monthly evidence to the contrary. And so we got massive over capitalization on credit to make it all work.

  Unfourtunately, I think it works a any income level. I know of people who had a household income over $200,000 who were trying to live on appreciably more than that. Perhaps even more confounding as it IS very good money to be sure, but they still thought, proportionally that they were better off than they were and tried to live a $500,000 lifestyle, to their ultimate failure.

  So the government's fear of one thing (unemployment) lead them on a course of policies that led to "controlled" inflation and employment that had people lose a sense or proportion and behave incorrectly. A case of no matter how much interference is made, there were always be uncontrollable consequences. Perhaps people educated by the parameters of financial reality is better than smoke and mirrors, as there is a better chance that people will act responsibly in their own self interest.

  Published: February 24, 2009 9:54 AM

• gooddebate

  This comment stood out to me,

  "Well it's a problem of first persuading the public that, in the present situation, the pressure of the trade union does not deserve public support. That you must achieve before you can do anything by legislation reducing the powers of the trade unions. It must be a long process. I don't see any immediate cure."

  He doesn't minimize himself or his cause. He sees the political reality and is willing to form his opinion around that reality.

  Great Stuff.

  Published: February 24, 2009 11:07 AM

• lightofliberty

  Wow! Hayek handled the inquisitors with grace and intellect. One should go no further than to listen to this Q&A to understand how ignorance and futility has been passed through the generations.

  Thank you for sharing this with the world.

  Published: February 24, 2009 1:41 PM

• pbergn

  Great interview...

  Very pertinent to the current mess we are in...

  We need more people like Dr. Hayek among our economic policy makers...

  Published: February 24, 2009 4:05 PM

• Dick Fox

  The first thing I noticed is how short Dr. Hayek's answers were yet they were directly to the point. Oh, for than kind of honesty today.

  Just as an aside, I would love to slap Hobart Rowan. What a fool!

  Published: February 24, 2009 4:12 PM

• Franklin

  Right on, Dick Fox.

  Will:
  "Why are so many intellectuals...hostile to capitalism?"

  Hayek: "...I think it's the intellectual attraction of a system you can deliberately control, which is fascinating to the intellectual."

  Rowan: "Dr. von Hayek, coming back quickly to Great Britain, isn't it possible that if we pursued your philosophy and theory...."
  Rowan Translation -- "I'm one of those intellectuals who seek control...."

  Cheers.
  F.

  Published: February 24, 2009 6:51 PM

• hayesy

  I think it's the intellectual attraction of a system you can deliberately control, which is fascinating to the intellectual."

  I've come to a similar conclusion. Great minds, I suppose. There's also not as much intellectual gravitas involved in "Just leave it alone, it'll work itself out" as opposed to the complex mathematical and terminological snow-jobs most economists push to bamboozle the public and the politicians trying to impress them.

  Published: February 24, 2009 8:19 PM

• Jake Taylor

  Great comments, Brad.
  We're like frogs in the slowly boiling pot.
  

  Published: February 24, 2009 11:13 PM